SunTrust: Financial Loser
The broad indexes all declined following HSBC's report that its flash purchasing managers index showed a decline in Chinese manufacturing during March. The index declined to 48.1 for March from February's revised 49.6, while new factory orders declined to a four-month low.
In Europe, the Markit euro-zone purchasing managers' composite output index declined to a three-month low of 48.7 during March, from 49.3 in February.
Back home, the U.S. Labor Department reported that initial jobless claims for the week ended March 17 fell 5,000 to 348,000, coming in at their lowest level since Feb. 2008, but that wasn't enough to keep U.S. stocks out of the red.
The KBW Bank Index (I:BKX) declined 2% to close at 49.10, with all 24 index components showing decline for the session.
SunTrust's shares have now returned 34% year-to-date, following a 40% decline during 2011.
After the Federal Reserve rejected the Atlanta lender's plan to return capital to investors this year through a dividend increase and share buybacks, SunTrust said in a statement on March 13 that it would "not be increasing its return of capital to shareholders at this time," and that it would maintain its current quarterly dividend of five cents a share, and "redeem certain trust preferred securities at such time as their governing documents permit, including when these securities are no longer expected to qualify as Tier 1 capital."
Guggenheim Securities analyst Marty Mosby on Wednesday downgraded SunTrust to a neutral rating from a "Buy" rating, while leaving his price target for the shares unchanged at $26, which is the analyst's estimate of the company's fourth-quarter 2012 tangible book value per share.
Mosby said that "without these increases in capital distribution, the stock price does not receive the needed support to push it higher tangible book value."
SunTrust trades for 0.9 times the company's reported tangible book value of $25.33 and for nine times the consensus 2013 EPS estimate of $2.69 a share, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is $1.75.
Interested in more on SunTrust? See TheStreet Ratings' report card for this stock .
Shares of KeyCorp (KEY) declined 3% to close at $8.35.
The shares have now returned 9% year-to-date, following last year's 12% decline.
KeyCorp's shares now trade for 0.9 times the company's reported Dec. 30 tangible book value of $9.22, and for 10 times the consensus 2013 EPS estimate of 81 cents. The consensus 2012 EPS estimate is 77 cents.